Sketch LTC, LAC, and LMC curves for the production function given in Problem 2. Does this production function have constant, increasing, or decreasing returns to scale?
Answer to relevant QuestionsSuppose that a firm has the following production function: Q (K, L) = 2L √K.a. If the price of labor is 2 and the price of capital is 4, what is the optimal ratio of capital to labor? b. For an output level of Q = 1000, ...True or false: Consumer surplus is the area between the demand curve and the price line. For a perfectly competitive firm the demand curve equals the price line. Thus, a perfectly competitive industry produces no consumer ...Same as Problem 6, except nowLTCQ = Q2 + 4QCould any firm actually have this particular LTC curve? Why or why not?Suppose a representative firm in a perfectly competitive, constant-cost industry has a cost function TC = 4Q2 + 100Q + 100.a. What is the long-run equilibrium price for this industry? b. If market demand is given by the ...Now suppose the monopolist in Problem 2 has a total cost curve given by TC = 16 + 4Q2. The corresponding marginal cost curve is now MC = 8Q and fixed costs are back to the original level. Find the monopolist’s profit- ...
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